Pound price rebounds on stronger UK retail sales, but BoE rate cut still likely
The Pound sterling edged higher in Friday’s European session after stronger-than-expected UK retail sales data suggested continued consumer resilience despite mounting global trade headwinds. According to the Office for National Statistics, retail sales rose by 0.4% in March, surprising economists who had anticipated a 0.4% decline.
On a year-over-year basis, sales increased by 2.6%, comfortably beating the expected 1.8% and the previous figure of 2.2%.
The report briefly lifted Sterling against major peers, with GBP/USD rebounding from intraday lows and testing resistance near the 50-day exponential moving average around $1.3303. The pair continues to consolidate just below $1.3347, a ceiling that, if broken, could set the stage for a test of the April 22 high at $1.3424.
GBP/USD price dynamics (March 2025 - April 2025) Source: TradingView.
BoE rate cut expectations remain firm despite economic strength
Despite the positive retail sales data, traders remain heavily positioned for a 25-basis-point interest rate cut by the Bank of England in May. LSEG data shows market pricing implies an 82% probability of a reduction, as broader global risks continue to weigh on sentiment.
BoE Governor Andrew Bailey, speaking at the IMF Spring Meetings, warned that escalating trade tensions and tariffs—particularly those initiated by the U.S.—could send “shockwaves” through the UK economy. While ruling out a technical recession, Bailey emphasized the risks to growth, highlighting that “we do have to take very seriously the risk to growth.”
Technical levels to watch
Sterling is clinging to the $1.33 level after rebounding from ascending trendline support at $1.3274. Bulls will need a clean break above $1.3347 to maintain upward momentum. On the downside, support at $1.3274 is critical; a breach could open the door to $1.3209 and $1.3144, which align with the 200 EMA.
As covered in earlier sessions, GBP/USD maintains a bullish structure as long as the price holds above $1.3250. The pair’s response to upcoming UK retail sales and the BoE’s May decision will be pivotal in confirming whether the bullish trend can sustain into Q2 2025.
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